East of Suez Market Update 18 May

Prices in East of Suez ports have moved in mixed directions, and adverse weather has halted bunkering across Zhoushan’s OPL area since this morning.

IMAGE: Aerial view Zhoushan City, Zhejiang Province. Getty Images

Changes on the day to 17.00 SGT (09.00 GMT) today from Friday:

• VLSFO prices up in Fujairah ($37/mt), Zhoushan ($28/mt) and Singapore ($10/mt)
• LSMGO prices up in Fujairah ($24/mt), and down in Singapore ($15/mt) and Zhoushan ($5/mt)
• HSFO prices up in Singapore ($13/mt) and Fujairah ($5/mt), and down in Zhoushan ($11/mt)
• B30-VLSFO price up in Singapore ($19/mt)

VLSFO prices across East of Suez ports have risen by $10-37/mt over the weekend. Zhoushan’s VLSFO price is currently at discounts of $95/mt to Fujairah and $14/mt to Singapore.

Meanwhile, Zhoushan’s HSFO price has declined, diverging from the upward trend in VLSFO prices. As a result, the port’s Hi5 spread has widened by $39/mt to $128/mt. Even so, it remains below Fujairah’s $223/mt and Singapore’s $149/mt.

In Zhoushan, several suppliers are dealing with bunker delivery backlogs caused by adverse weather, although overall fuel availability remains normal amid subdued demand, a trader said. Recommended lead times for VLSFO remain largely unchanged from last week at around 5-7 days, while HSFO and LSMGO require 4-6 days.

Bunker deliveries at Zhoushan’s Tiaozhoumen and Xiazhimen outer anchorages have been suspended since this morning due to bad weather conditions, according to a source.

However, bunkering operations at the more sheltered Xiushandong anchorage and the inner anchorage at Mazhi continue without disruption.

Most suppliers remain uncertain about when full bunkering operations across Zhoushan will resume, the source added.

Brent

The front-month ICE Brent contract has gained $0.89/bbl on the day from Friday, to trade at $110.04/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude has opened the week on a firmer footing as instability in the Middle East continue to underpin oil prices.

Regional oil producers, including Saudi Arabia and the UAE, reported new drone strikes over the weekend, intensifying the ongoing US-Israel standoff with Iran.

The UAE’s Ministry of Foreign Affairs has condemned the attack which targeted an electricity generator in the Barakah Nuclear Power Plant in Al Dhafra region.

The strike was “carried out by a drone that entered the country’s territory from the western border direction,” the UAE’s foreign affairs ministry said in a statement.

“If anything, re-escalation risks are increasing, with a drone strike on the UAE’s only nuclear power plant over the weekend,” two analysts from ING Bank noted.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US rose by five to 415 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Tuhin Roy and Aparupa Mazumder

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